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Kevin O'Brien
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Sovereign Advisers is a private risk metrics firm specializing in economic research and litigation support. Kevin O'Brien is a former investment banker who presently serves as an economic development finance advisor to various governments and private sector institutions.
  • Moody's, Standard & Poor's Complicit in Hiding Billions of Dollars of China's Debt 0 comments
    Oct 2, 2010 8:30 PM

    A Complaint filed by Sovereign Advisers with the Antitrust Division of the United States Department of Justice and the European Commission Directorate General for Competition against Standard & Poor’s and Moody’s Investors Service alleges that the credit rating duopoly actively assists the Chinese communist government, the People’s Republic of China, in shedding its foreign debt obligation through the distribution of false sovereign credit ratings which ignore China’s defaulted sovereign debt.

    The Complaint was filed on behalf of the Starwood Trust, which represents defaulted creditors holding full faith and credit sovereign obligations of the Chinese government which the People’s Republic of China refuses to repay in violation of international law. Despite its refusal to repay the debt, both Moody’s Investors Service and Standard & Poor’s, which collectively control in excess of 90% of the industry and which are paid for issuing credit ratings, maintain “investment grade” credit ratings for China, according to the Complaint. The demonstrably false ratings ignore China’s default and thereby enable the Chinese communist government to shed its foreign debt obligation and to do so free from a default penalty.

    The Complaint alleges that the credit rating duopoly are motivated by a profit incentive to continue to actively assist the Chinese government in the creation and sale of new debt obligations, and have evolved from “publishers” of information into market actors who are active participants in the issuance of new debt obligations. Also named in the Complaint are Goldman Sachs and Morgan Stanley, for their role as credit rating advisers to the Chinese government.

    The Complaint was filed on behalf of all similarly situated creditors within both the United States and the European Union. The Complaint is accessible on the world wide web at:

    www.globalsecuritieswatch.org/DOJ_Antitr...



    Disclosure: No Positions
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